Defined terms for the annuity market and lifetime income landscape.
Tax deferral is the postponement of federal income tax on the earnings inside an annuity contract, with tax deferred until distributions are taken from the contract.
A variable annuity is an insurance contract under which the contract owner allocates premium to subaccounts holding investments whose values fluctuate with market performance, with optional living-benefit and death-benefit riders providing contractual guarantees in exchange for explicit charges.
A volatility-controlled index is a constructed index, typically built by a carrier in partnership with an index provider, that targets a specified level of volatility by dynamically reallocating between an equity component and a cash or fixed-income component as measured volatility rises and falls.
A withdrawal fee is a charge imposed by an insurance carrier on amounts withdrawn from an annuity contract during the surrender period or in excess of the free-withdrawal provision, with the most common form being the surrender charge, and some contracts also imposing a separate transactional fee.
